Historically, property investments have consistently performed
There is a finite amount of land available but a continued need for more homes
There is a continuing demand from tenants
The holiday-let market
New build?

Historically, property investments have consistently performed

• Whilst short term gains are possible, property should ideally be viewed as a mid to long term investment as, historically, any falls in value have been countered by more significant rises.
• The average house price in the UK in 1956 was £1,975. 25 years later it was £23,730. By the end of the 1980’s the figure stood at £61,495 and by the end of the century the average house price was £74,638. By quarter 3 of 2009, the figure stood at £160,159. (source: www.nationwide.co.uk)
• Aside from the capital growth aspect, a good buy to let investment will produce a consistent positive monthly cash-flow.
• 82% of investment landlords do not expect to sell properties in the coming twelve months. 16% of ARLA members say that landlords are currently buying more properties whilst 6% are currently selling. The survey of landlords also shows that 41% believe that investor landlords are being tempted back to the market because of the minimal interest on savings rates. Only 24% said that they did not believe this was the case. The average life expectancy of residential property investments remains long term at an average of 17 years and over a quarter of respondents expect to keep their property for over 20 years. (source: ARLA review and index Q2 2009)
• With many pensions underperforming, property is increasingly being used as a way to fund retirement. A growing number of deals now qualify for SIPPs inclusion.
• An investor should: Plan to be a Buy to Let Landlord over the medium to long-term as it is an investment that produces a variable combination of rental yield and capital appreciation and make an objective business decision when purchasing a property based on research of the needs and requirements of the local market, not, based on personal taste. (Taken from the ARLA charter)

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There is a finite amount of land available but a continued need for more homes

• The population in the UK is increasing: In 1956 the estimated population was just over 51m. The figure in 2006 was 60.6m and the population is projected to increase by 14.3% between 2006 and 2026, reaching 69.3m. (source: Halifax Economic Factbook)
• The average UK household size is decreasing: In 1961 the average household size was 3.01 and it's continued since on a downward trend. At the start of the new millennium it was 2.37, had dropped to 2.33 in 2004 and is projected to fall to 2.24 by 2011 and 2.10 by 2026. (source: www.communities.gov.uk)
• The rate at which new UK households are formed is projected to be faster than the overall growth in the population. (source: Halifax Economic Factbook)
• The fastest growth areas for household formation are projected to be London, the East and the South West, while the slowest growth is projected in the North East and North West. (source: Halifax Economic Factbook)
• As of 2007, there were 25.9 million dwellings in England. 69.4% of households were owner occupied, 12.5% were private rented, 9.6% local authority and 8.5% housing association. (source: Halifax Economic Factbook)
• In terms of UK house-building, the private sector continues to dominate the market with its share of total completions at a high of 98% in 2003, falling in 2007 to 87%. Local authority completions are very low. This is in sharp contrast to the mid 1970s when local authority completions accounted for over 40% of the total. (source: Halifax Economic Factbook)
• The number of households in England is projected to grow to 27.8 million by 2031, an increase of 6.3 million (29 per cent) over the 2006 estimate, or 252,000 households per year. (source: www.communities.gov.uk)

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There is a continuing demand from tenants

• Consumer expectations are relative to what's affordable so pricing plays a huge part in decisions. House price to earning ratios in the UK stood at 4.43 in August 2009 so rental can sometimes be the only realistic option, especially with the current difficulties in obtaining high loan to value borrowing. (source: Halifax Housing Research)
• The National house price/earning ratio in the UK peaked at 5.82 in April 2007. This compares with a 20 year average of 4.15, although interestingly the figure has been below 4% in 15 of the years since 1983. (source: Halifax Housing Research)
• At the end of 2007, the percentage of owner occupied dwellings in the UK was 69.4%, with a further 12.5% (3.2m) renting privately. The remaining 18.1% were in either local authority or housing association accommodation. (9.6% were in local authority accommodation and this figure has been on a downward trend since 1977 when the figure stood at 31.7%). (source: Halifax Economic Factbook)
• The owner-occupation rate rose by 1.7 percentage points between 1997 and 2007. During 1987-1997 owner occupation rose by 5.8 percentage points. (source: Halifax Economic Factbook)
• On average, ARLA members say that tenants remain in the same property for a period of 16.1 months. (source: ARLA Members Survey of the Private Rented Sector Q3 2009)

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The holiday-let market

• This is an area in which we've seen an increasing number of investment opportunities. Offering a different type of investment to typical UK rentals, the returns can be very high.
• With the entire world from which to select an investment property, it’s possible to identify markets which are more robust in standing up to economic difficulties.
• Typically, excellent incentives are on offer for investors and mortgages are often taken on the loan to value, as opposed to the actual purchase price and of course, the less capital you put into the deal, the higher your leverage and therefore return on investment (ROI).
• With a more rapid turnover of tenants, the potential for void periods can sometimes be greater, although many of these types of deals are offered with a long term rental guarantee, or a rental pool scheme.
• Many developments are also by UK developers, or are handled by UK solicitors, for added security and peace of mind.
• A common concern for some investors purchasing abroad is the management and maintenance of the property. In the majority of cases, developers will put management companies in place that take care of every aspect of the property. This means that an overseas property can offer even fewer potential issues for the owner to have to deal with than a property in the UK.
• Many of the developments we offer are on exclusive holiday resorts in some of the most desirable locations in the world and with varying attractions to suit different types of holidaymaker.
• As an added bonus, buying a property to use as a holiday-let can also offer personal usage, either for you, or your friends and family.
• With fantastic yields and capital growth potential, the possibility is there to enjoy a holiday in the sun paid for by the income the property has generated.

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New build?

• A sparkling new home with its clean and modern fittings is often absolutely ideal for somebody looking to rent. New build properties are therefore potentially easier to let and can also achieve premium rents.
• New build properties are typically offered with developer’s warranties as well as NHBC/Zurich certificates, offering peace of mind and fewer potential problems to deal with.
• Low maintenance is also an advantage for tenants and owners alike.
• Purchasing off-plan means you can benefit from any capital growth over the build period. By only paying a deposit amount until completion, you are leveraging the capital you invest against the value of the property. Please see our questions answered page for further details.
• Developers can offer various types of incentives, meaning you can pick a deal that suits your strategy.

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